Chris Lombardi puts defense and security under the spotlight, as he shares his takes on recent NATO and EU cooperation and provides insight into the company’s own long-term strategic partnerships in Europe.

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Europe boasts some of the most advanced defence technologies in the world, but fragmented regulation, prohibitive licensing procedures and a general lack of transparency are holding back the defence market.

The European Commission last year published plans aimed at opening the market, worth around €24 billion, to greater competition. The package, which is currently being examined by member states and MEPs, contains new rules on public procurement and licensing procedures.

Efficiency gains

Member states, while open to the promise of economies of scale and efficiency gains, have long been sceptical about the planned regime. The proposals have the potential to shake up well-established and often exclusive relationships between governments and suppliers.

Sometimes national positions are not immediately apparent. France, for example, has very publicly raised moral objections to changes in export rules that would make it easier to transport military goods within the EU. The rules, it claims, threaten national controls over exports to potentially dubious third countries.

But a bigger worry for France, on which it has been far more discreet, is the impact of new public procurement rules that would end so-called offset trading privileges allowing member state governments to secure two-way contracts benefiting national companies. According to one source, France’s objections to these limitations at one point threatened to scupper a deal on the entire package.

Safeguards

The public procurement rules proposed by Charlie McCreevy, the internal market commissioner, would open up thousands of contracts to public tender by curtailing member states’ ability to protect markets on grounds of national security. The measures would specify goods that should not be deemed sensitive, such as paint, furniture and certain vehicles.

Alexander Graf Lambsdorff, a German Liberal MEP, suggested amendments that would tighten the proposals further by adding provisions giving bidders the right to call for an investigation of contractual procedures if they suspect they have been unfairly excluded from consideration.

The licensing rules, proposed by Günter Verheugen, the enterprise and industry commissioner, are intended to dismantle obstacles to companies doing cross-border business. Currently, companies have to buy licences for each and every product shifted over borders. Verheugen’s rules would allow companies to apply for global licences covering several product categories.

Export rules

Heide Rühle, a German Green MEP, has introduced safeguards into proposals that would preserve member states’ control over export rules and increase oversight of private sector activities. Goods or components transferred within the EU would be subject to legislation in the country of origin.

The public procurement directive will be voted by MEPs on the European Parliament’s internal market and consumer protection committee on 9 October. The intra-community transfers directive will be voted on by the committee on 7 October. A vote in plenary has been scheduled for November.

? The European Defence Agency (EDA), in which all 27 EU member states except Denmark participate, presented its Capability Development Plan (CDP) on Tuesday (8 July). The CDP defines the EU’s military needs and priorities as a guide for national defence investments and co-operation efforts. It is to “support, not replace” decision-making by member states, said Javier Solana, EU foreign policy chief and EDA head. As part of preparations for the CDP, the EDA established a database of member state defence plans and programmes, which helped identify opportunities for future co-operation.

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Chris Lombardi puts defense and security under the spotlight, as he shares his takes on recent NATO and EU cooperation and provides insight into the company’s own long-term strategic partnerships in Europe.